Farmers' aids fatten up chemical plants

The Romanian State has decided to buy about 260,000 tonnes of fertilisers next year, in order to help out the small farmers. Each farmer will thus benefit from a several million ROL aid. However, things are different when it comes to four Romanian companies – Azomures, Doljchim, Turnu and, perhaps, Amonil: they stand to gain about $65 million.
One thing is certain about the subsidy programme – the fertilisers output will go up more than 30% next year.
It is less clear, however, how exactly the 65 million dollars will be split among the four companies that can supply the fertilisers: Azomures TA„srgu-Mures, Turnu SA (based in Turnu Magurele), Doljchim Craiova and, perhaps, Amonil Slobozia.
“This has not been decided, yet,” says Mihai Ogrean, Azomures financial director. “The orders will most likely be gathered by the County Agricultural Divisions and will be filed to the manufacturers. If this does happen, distribution will probably be regional, as well: each company will work with a certain area,” Ogrean states. Of the four producers, Amonil Slobozia is the only company unable to supply fertilisers in line with the required standards.
“We only make azote-based fertilisers, while this programme stipulates that phosphate should also be included among their components. We do however hope that we can work out a way, by the beginning of next year, so that our company can also benefit from this programme; we will probably buy phosphate and mix it with the other ingredients,” says Victor Dobrescu, general manager of Amonil.
How will the programme work? The Emergency Ordinance having approved it stipulates that farmers owning less than 2.5 ha of farming land outside localities and directly managing it will benefit from free aid next spring, namely 100 kilos of fertilisers for each hectare.
The total quantity of fertilisers to be acquired for this programme will revolve around 260,000 tonnes. As the price of a 50 kilo sack bought from the State was set by an Emergency Ordinance at a maximum of 410,000 ROL, the total value of the aid programme aimed at the small farmers will reach about 2,130 billion ROL (more than 65 million dollars).
Assuming the $65 million will be equally divided among the four manufacturers, each of the plants will see a $16m jump in sales. In the case of Amonil, turnover will increase by 30-40%.
Azomures will experience a less spectacular sales increase (10-15%). However, the Government decision will greatly benefit the plant’s profit. “We usually have an 8-10% profit margin with this type of fertilisers,” says Mihai Ogrean. This would push additional profit up to 1.6 million dollars, while the plant’s nine-month net income amounted to $4m.